UNITED STATES SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS RELEASE 40-3912, SEPTEMBER 5, 2014: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 203(F) OF THE INVESTMENT ADVISERS ACT OF 1940 AGAINST JOHN THOMAS PAPPAS. ON FEBRUARY 1, 2012, A FINAL ADMINISTRATIVE ORDERED WAS ENTERED AGAINST PAPPAS, BARRING HIM "FROM REGISTRATION AND FROM ENGAGING IN ANY SECURITIES ACTIVITIES INTO, WITHIN OR FROM THE STATE OF ALABAMA, INDEFINITELY," IN A PROCEEDING BY THE ALABAMA SECURITIES COMMISSION, ADMINISTRATIVE ORDER NO. OB-2012- 0005. ON JULY 7, 2011, PRIOR TO THE ENTRY OF THE ALABAMA ORDER, PAPPAS EXECUTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT (THE "AWC") WITH THE FINANCIAL INDUSTRY REGULATORY AUTHORITY ("FINRA"), BY WHICH HE AGREED TO A PERMANENT BAR FROM ASSOCIATING IN ANY CAPACITY WITH ANY FINRA MEMBER AS A RESULT OF HIS VIOLATION OF FINRA RULES 2150(A), 2010, 8210, AND NASD RULE IM-2310-2. IN VIEW OF THE ALLEGATIONS MADE BY THE DIVISION OF ENFORCEMENT, THE COMMISSION DEEMS IT NECESSARY AND APPROPRIATE IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE INSTITUTED TO DETERMINE: WHETHER THE ALLEGATIONS SET FORTH HEREOF ARE TRUE AND, IN CONNECTION THEREWITH, TO AFFORD RESPONDENT AN OPPORTUNITY TO ESTABLISH ANY DEFENSES TO SUCH ALLEGATIONS; AND WHAT, IF ANY, REMEDIAL ACTION IS APPROPRIATE IN THE PUBLIC INTEREST AGAINST RESPONDENT PURSUANT TO SECTION 203(F) OF THE ADVISERS ACT.

Order

Bar (Permanent)

SEE COMMENT SECTION

12/19/2014

ALABAMA

IN RESPONSE TO A COMPLAINT RECEIVED BY FINRA, FINRA INITIATED AN INVESTIGATION OF PAPPAS. MERRILL LYNCH ALSO BEGAN AN INTERNAL INVESTIGATION OF PAPPAS. BOTH FINRA AND MERRILL LYNCH DETERMINED THT FOUR CLIENTS WERE IMPACTED BY THE CONVERSION OF CLIENT FUNDS BY PAPPAS. WITH REGARD TO THREE OF THE FOUR CLIENTS, PAPPAS ACTIVATED THE ONLINE BILL FEATURE IN THE CLIENTS' ACCTS, AND THEN DIRECTED PAYMENTS OF HIS PERSONAL CREDIT CARD ACCTS. PAPPAS ATTEMPTED A CONVERSION FROM THE ACCT OF A FOURTH CLIENT; HOWEVER, THE TRANSACTION WAS STOPPED BY MERRILL LYNCH. WITH REGARD TO THE 4TH CLIENT WHOSE ACCT WAS IMPACTED, ON 01/27/2010, PAPPAS PLACED A TRADE TOTALING $6893.43. CUSTOMER WAS DECEASED AT THE TIME OF THE TRADE & TRADE WAS NOT AUTHORIZED BY ANY REP OF THE CUSTOMER AND PAPPAS WAS NOT GRANTED DISCRETION TO TRADE IN THE ACCT. PAPPAS WAS TERMINATED BY ML ON 02/04/2010. ON 03/18/11, COUNSEL TO PAPPAS DELIVERED TO ML A CHECK IN THE AMOUNT OF $98,297.00, REPRESENTING ACTUAL LOSSED SUSTAINED BY ML CLIENTS WHO SOUGHT RESTITUTION. TWO VICTIMS WERE RELATIVES OF PAPPAS AND ELECTED NOT TO PURSUE RESTITUTION FROM PAPPAS. ALL ML CLIENTS AFFECTED BY PAPPAS ELECTED, VIA LETTER, TO HOLD ML HARMLESS RELATIVE TO THE CONVERSION OF THEIR FUNDS. ALL CLIENTS SEEKING RESTITUTION HAVE BEEN MADE WHOLE. ON 07/07/11, PAPPAS EXECTUTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT PERTAINING TO THE VIOLATION OF FINRA RULES 2150(A) AND 2010. BY EXECUTING SAID LETTTER OF ACCEPTANCE, WAIVER AND CONSENT, PAPPAS AGREED TO A PERMANENT BAR FROM ASSOCIATING WITH ANY FINRA MEMBER IN ANY CAPACITY. ON 02/01/12, ADMINISTRATIVE ORDER TO BAR, #0B-2012-0005 WAS ISSUED AGAINST PAPPAS BY THE COMMISSION WITH A NOTICE OF RIGHT TO HEARING, IF REQUESTED WITHIN 28 DAYS. PAPPAS' 28 DAYS TO REQUEST A HEARING HAVE EXPIRED WITH NO RESPONSE OR REQUEST RECEIVED FROM PAPPAS, AND OB-2012-0005 HAS BEEN MADE A FINAL ORDER OF THE COMMISSION.

Order

Bar (Permanent)

ALL CAPACITIES

PERMANENT

PAPPAS TERMINATED BY ML UPON DISCOVERY OF PAPPAS CONVERTING CLIENT FUNDS/PERSONAL USE. PAPPAS PREVIOUSLY CONSENTED TO PERMANENT BAR FROM ASSOCIATION WITH ANY FINRA MEMBER. 2 OF PAPPAS' 4 CLIENTS ARE RELATED TO PAPPAS AND REFUSED TO PURSUE CHARGES AGAINST HIM. THE 2 REMAINING CLIENTS REACHED SETTLEMENT AGREEMENTS WITH ML IN FEB 2011. SAID AGREEMENTS PROVIDED FOR REIMBURSEMENTS IN AMOUNTS GREATER THAN THE AMOUNT CONVERTED FROM THEIR ACCOUNTS BY PAPPAS. FUNDS HAVE BEEN DISTRIBUTED TO CLIENTS.

2/1/2012

IN RESPONSE TO A COMPLAINT RECEIVED BY FINRA, FINRA INITIATED AN INVESTIGATION OF PAPPAS. MERRILL LYNCH ALSO BEGAN AN INTERNAL INVESTIGATION OF PAPPAS. BOTH FINRA AND MERRILL LYNCH DETERMINED THT FOUR CLIENTS WERE IMPACTED BY THE CONVERSION OF CLIENT FUNDS BY PAPPAS. WITH REGARD TO THREE OF THE FOUR CLIENTS, PAPPAS ACTIVATED THE ONLINE BILL FEATURE IN THE CLIENTS' ACCTS, AND THEN DIRECTED PAYMENTS OF HIS PERSONAL CREDIT CARD ACCTS. PAPPAS ATTEMPTED A CONVERSION FROM THE ACCT OF A FOURTH CLIENT; HOWEVER, THE TRANSACTION WAS STOPPED BY MERRILL LYNCH. WITH REGARD TO THE 4TH CLIENT WHOSE ACCT WAS IMPACTED, ON 01/27/2010, PAPPAS PLACED A TRADE TOTALING $6893.43. CUSTOMER WAS DECEASED AT THE TIME OF THE TRADE & TRADE WAS NOT AUTHORIZED BY ANY REP OF THE CUSTOMER AND PAPPAS WAS NOT GRANTED DISCRETION TO TRADE IN THE ACCT. PAPPAS WAS TERMINATED BY ML ON 02/04/2010. ON 03/18/11, COUNSEL TO PAPPAS DELIVERED TO ML A CHECK IN THE AMOUNT OF $98,297.00, REPRESENTING ACTUAL LOSSED SUSTAINED BY ML CLIENTS WHO SOUGHT RESTITUTION. TWO VICTIMS WERE RELATIVES OF PAPPAS AND ELECTED NOT TO PURSUE RESTITUTION FROM PAPPAS. ALL ML CLIENTS AFFECTED BY PAPPAS ELECTED, VIA LETTER, TO HOLD ML HARMLESS RELATIVE TO THE CONVERSION OF THEIR FUNDS. ALL CLIENTS SEEKING RESTITUTION HAVE BEEN MADE WHOLE. ON 07/07/11, PAPPAS EXECTUTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT PERTAINING TO THE VIOLATION OF FINRA RULES 2150(A) AND 2010. BY EXECUTING SAID LETTTER OF ACCEPTANCE, WAIVER AND CONSENT, PAPPAS AGREED TO A PERMANENT BAR FROM ASSOCIATING WITH ANY FINRA MEMBER IN ANY CAPACITY. ON 02/01/12, ADMINISTRATIVE ORDER TO BAR, #0B-2012-0005 WAS ISSUED AGAINST PAPPAS BY THE COMMISSION WITH A NOTICE OF RIGHT TO HEARING, IF REQUESTED WITHIN 28 DAYS. PAPPAS' 28 DAYS TO REQUEST A HEARING HAVE EXPIRED WITH NO RESPONSE OR REQUEST RECEIVED FROM PAPPAS, AND OB-2012-0005 HAS BEEN MADE A FINAL ORDER OF THE COMMISSION.

FINRA

FINRA RULES 2010, 2150(A), 8210, NASD RULES 2110, 2330(A), INTERPRETATIVE MATERIAL 2310-2: BETWEEN SEPTEMBER 2007 AND JANUARY 2010, PAPPAS CONVERTED FUNDS FROM THREE CUSTOMER ACCOUNTS AND ATTEMPTED TO CONVERT FUNDS FROM ONE OTHER CUSTOMER ACCOUNT. IN EACH INSTANCE, PAPPAS ACTIVATED THE ONLINE BILL PAYMENT FEATURE IN THE CLIENT'S ACCOUNT AND THEN DIRECTED PAYMENTS TO HIS PERSONAL CREDIT CARDS. PAPPAS HAD POWER OF ATTORNEY OVER THE ACCOUNT OF A CUSTOMER. DURING 2009 AND 2010, PAPPAS USED THE ONLINE BILL PAYMENT FEATURE TO DIRECT A SERIES OF PAYMENTS TOTALING $61,161.23 FROM THE ACCOUNT OF THE CUSTOMER TO HIS PERSONAL CREDIT CARDS. PAPPAS MADE THESE PAYMENTS WITHOUT THE CUSTOMER'S KNOWLEDGE OR AUTHORIZATION. BETWEEN SEPTEMBER 2007 AND JULY 31, 2009, PAPPAS USED THE ONLINE BILL PAYMENT FEATURE TO DIRECT APPROXIMATELY 40 PAYMENTS TOTALING $69,120.52 FROM THE ACCOUNT OF A SECOND CUSTOMER TO HIS PERSONAL CREDIT CARDS. PAPPAS MADE THESE PAYMENTS WITHOUT THE SECOND CUSTOMER'S KNOWLEDGE OR AUTHORIZATION. ON JANUARY 7, 2010 AND JANUARY 20, 2010, PAPPAS USED THE ONLINE BILL PAYMENT FEATURE TO DIRECT TWO PAYMENTS TOTALING $27,282 FROM THE ACCOUNT OF A THIRD CUSTOMER TO HIS PERSONAL CREDIT CARDS. PAPPAS MADE THESE PAYMENTS WITHOUT THE THIRD CUSTOMER'S KNOWLEDGE OR AUTHORIZATION. ON JANUARY 13, 2010, PAPPAS ACCESSED THE ONLINE BILL PAYMENT SYSTEM FOR THE ACCOUNT OF A FOURTH CUSTOMER AND ATTEMPTED TO DIRECT TWO PAYMENTS TOTALING $14,260 TO HIS PERSONAL CREDIT CARDS. HOWEVER, THE PAYMENTS WERE STOPPED BY HIS MEMBER FIRM BEFORE THEY COULD BE MADE. PAPPAS ATTEMPTED TO MAKE THESE PAYMENTS WITHOUT THE FOURTH CUSTOMER'S KNOWLEDGE OR AUTHORIZATION. IN ADDITION, ON JANUARY 27, 2010, PAPPAS PLACED A TRADE TOTALING $6,893.43 IN THE ACCOUNT OF A DECEASED FIRM CUSTOMER. THIS TRADE WAS NOT AUTHORIZED BY ANY REPRESENTATIVE OF THE CUSTOMER, AND PAPPAS WAS NOT GRANTED DISCRETION TO TRADE IN THE ACCOUNT. FURTHER, PAPPAS REFUSED TO RESPOND TO FINRA REQUESTS FOR INFORMATION AND TESTIMONY.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

Indefinite

7/25/2011

WITHOUT ADMITTING OR DENYING THE FINDINGS, PAPPAS CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.